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The future is here

The last year or so have seen some big but subtle changes in the
techno-industrial complex that holds the imagination of the
business and investment communities.

Facebook has cemented itself as the premier information and media
platform. Outside of television itself,
Facebook is the next TV.

Google is the unmatched leader in online search and advertising.
And while Google is now Alphabet, this corporate reshuffling
which allows the company to pursue new areas of innovation more
importantly enables the core Google search and ad product the
space and protection it ultimately needs to continue succeeding,
however unsexy that success might be.

But aside from Facebook completing its entrenchment inside the
media industry and Uber's continuing saturation of the world's
major urban markets, most all of this was true a year or even two
years ago. This, then, is the change: we already had everything
we were going to get this cycle.

And so this is the future, our primary harvest from a post
tech-bubble boom in Silicon Valley that really did change our
lives and in many cases change them for the better. But for
everyone waiting for the "next big thing," I think that for at
least for the next economic cycle, this is it.

Enjoy your amazing cell phones that can hail a cab in minutes
while you look up literally any piece of information you want to
know or keep tabs on all of your extended family.

Conor Sen, a portfolio manager at New River Investments,
published a great post on Monday that brought together these
disparate lines of thought which make clear, at least for me,
that the tech future we were promised is actually happening right
now.

Conor argues that the post-recession world - a world of organic
food, on-demand services, electric cars, fintech disrupting banks
- is simply a world of great but niche products. Outside of
Facebook and Uber, Conor argues that this world simply does not
and will not scale.

We have done the innovation, we have spawned the parody
accounts praising this innovation, and now we are left to
witness the economic cycles that grow from periods of rapid
growth and development.

I once told Conor that history would remember Apple as a phone
company, Facebook as the phone book, and Google as ad agency. I'd
say we're most of the way there.

In Conor's view, we're going to see the cost of labor rise
sharply, capital investment will need to be far more intense than
it's been during the last six or seven years, labor will move to
cheaper metros as they get priced out of the megacities that have
been centers for foreign capital flight and inflated tech- and
finance-backed salaries.

I'd agree on all these points. This is the stuff of real economic
sea changes.

On the tech side, the next leg of innovation is apparently
chatbots and virtual
reality, but closing off humans from other humans will never
turn out to be a mainstream success. Many will argue technologies
like Facebook, Twitter, and Skype give us few reasons to leave
the house, but in fact these services make us more social than
ever before.

And this, really, is all people want: contact with other people.

As for what happens to the economy from here, many economists
would argue that housing is the economic
cycle. As the housing market ebbs and flows so too does the
marginal dollar spent. The consumer leads the economy both
directions. Consumer spending in recent years has remained solid
and labor market is still in good shape. Calls for recession seem
ill-placed.

But the housing market, in my view,
is facing a significant affordability issue. Homeownership is
increasingly out of reach for a young generation of professionals
that is just beginning to see the disadvantages of entering the
workforce during a depression dissipate.

The
overhauling of our economy into one that is about information
and specialized knowledge instead of one that is about
goods production and specialized skill has been
completed. This is, however, a slow process and along the way
we've managed to nominate Donald Trump for president.

It's been a bumpy transition and will continue to be. Creating a
new middle class out of radically re-focused centers of economic
vitality is hard.

The ways technology changes our lives, however, has almost surely
made its biggest transitions for as far as my limited eye can
see. My grandparents use iPads and send texts while teenagers use
those same devices to send disappearing video messages to each
other.

These experiences might seem worlds apart, but the space between
an 80-something reading the newspaper on an iPad and a pre-teen
sending Snapchats on an iPhone is, when compared to the
digitization of our world from just 20 years ago, vanishingly
small. Technology, by now, is only superficially generational.

Peter Thiel once
wrote that we wanted flying cars and all we got was 140
characters.